Top 4 Benefits of Second Charge Loans
If you find yourself crumbling under the financial restraints of a mortgage and require securing urgent funds for a short period, second charge bridging loans are an ideal solution.
The applications for second charge bridging loans are versatile and can range from financial solutions to purchase an investment property to business expansion and redevelopment of an existing one.
You can secure a second charge bridging loan on all properties, including buy-to-let residential and commercial properties.
Let us look at the top four benefits of acquiring a second charge bridging loan:
What Is A Second Charge Bridging Loan?
A second charge bridging loan is a subset of bridging loans offering funds on short notice with a typical maturity of 12-months, unlike a secured loan which is a long-term financial solution.
As the name suggests, a second charge bridging loan sits behind a first charge loan and often requires consent from the first charge lender. It is secured at a higher interest rate than a first charge bridging loan, reflecting the additional risk your second charge bridging loan lender takes.
Bridging loans can be secured as a second or third charge bridging loan instead of a mortgage arranged only on a first charge basis. Bridging loans do not require monthly payments and can be acquired by low or no-income borrowers. They are usually offered by smaller organizations offering flexible and personal solutions.
Benefits Of A Second Charge Bridging Loan
More and more people are turning to second-charge bridging loans as a means to raise capital without disturbing their existing mortgage arrangements. Due to its flexible nature and prompt accessibility to funds, second-charge bridging loans are expected to grow in demand in the future.
Second charge bridging loans enable the borrower to release equity on the property by taking a second charge instead of refinancing from the current deal. Furthermore, bridging loan rates are lower than ever, with the second charge bridging loans starting from 0.75% per month.
The expected benefits of second charge bridging loans include:
For borrowers with low rate/interest-only mortgage:
The second charge bridging loan lets you retain your existing mortgage without modifying its terms and conditions. A second charge bridging loan can allow flexible repayment, helping you save thousands of pounds in interest.
For borrowers trapped in a fixed rate with early repayment charges:
A second charge bridging loan can be cost-effective, keeping the existing mortgage in place without a penalty. An excellent way to gauge whether acquiring a second charge bridging loan is a good idea would be comparing the penalty for stopping or switching your existing fixed-rate mortgage before time.
A skilled financial solutions provider like UK Property Finance offers personalized cost comparison curated for your specific needs. You can also use a bridging loan calculator to estimate how much you can borrow and form a repayment strategy accordingly.
To secure further funds from your mainstream lender:
Mortgage rules have been getting tighter in the past few years, with lenders testing borrowers robustly to check if they meet their repayment criteria in case the interest rate rises.
However, a second charge bridging loan lender focuses on your individual borrowing needs and curates a tailor-made solution. If you come from an unusual income structure such as self-employment or complex financial background, second charge bridging loans are an excellent solution.
To acquire funds on short notice:
It might take a mainstream bank several months to put a loan together for a borrower; UK Property Finance makes financial solutions available to borrowers within hours of initial inquiry to release funds quickly, sometimes in less than two weeks. A second charge bridging loan can help people in dire need of a rapid cash injection. Incorporating open banking software can streamline the application process by providing lenders with instant access to your financial data, allowing for quicker assessment and approval. Additionally, considering unsecured business loans can be beneficial for those who need funds without the risk of collateral, offering flexibility and fast access to capital. Together, these solutions can significantly reduce the time it takes to secure the necessary funds, ensuring you can act swiftly in urgent financial situations.
What Is a Second Charge Bridging Loan?
A second charge bridging loan is a subset of bridging loans offering funds on short notice with a typical maturity of 12-months, unlike a secured loan which is a long-term financial solution.
As the name suggests, a second charge bridging loan sits behind a first charge loan and often requires consent from the first charge lender. It is secured at a higher interest rate than a first charge bridging loan, reflecting the additional risk your second charge bridging loan lender takes.
Bridging loans can be secured as a second or third charge bridging loan instead of a mortgage arranged only on a first charge basis. Bridging loans do not require monthly payments and can be acquired by low or no-income borrowers. They are usually offered by smaller organizations offering flexible and personal solutions.
Benefits Of A Second Charge Bridging Loan
More and more people are turning to second-charge bridging loans as a means to raise capital without disturbing their existing mortgage arrangements. Due to its flexible nature and prompt accessibility to funds, second-charge bridging loans are expected to grow in demand in the future.
Second charge bridging loans enable the borrower to release equity on the property by taking a second charge instead of refinancing from the current deal. Furthermore, bridging loan rates are lower than ever, with the second charge bridging loans starting from 0.75% per month.
The expected benefits of second charge bridging loans include:
For borrowers with low rate/interest-only mortgage:
The second charge bridging loan lets you retain your existing mortgage without modifying its terms and conditions. A second charge bridging loan can allow flexible repayment, helping you save thousands of pounds in interest.
For borrowers trapped in a fixed rate with early repayment charges:
A second charge bridging loan can be cost-effective, keeping the existing mortgage in place without a penalty. An excellent way to gauge whether acquiring a second charge bridging loan is a good idea would be comparing the penalty for stopping or switching your existing fixed-rate mortgage before time.
A skilled financial solutions provider like UK Property Finance offers personalized cost comparison curated for your specific needs. You can also use a bridging loan calculator to estimate how much you can borrow and form a repayment strategy accordingly.
To secure further funds from your mainstream lender:
Mortgage rules have been getting tighter in the past few years, with lenders testing borrowers robustly to check if they meet their repayment criteria in case the interest rate rises.
However, a second charge bridging loan lender focuses on your individual borrowing needs and curates a tailor-made solution. If you come from an unusual income structure such as self-employment or complex financial background, second charge bridging loans are an excellent solution.
To acquire funds on short notice:
It might take a mainstream bank several months to put a loan together for a borrower; UK Property Finance makes financial solutions available to borrowers within hours of initial inquiry to release funds quickly, sometimes in less than two weeks. A second charge bridging loan can help people in dire need of a rapid cash injection.
How a secured loan works
A secured loan is exactly as it sounds. The borrowing is secured against a property asset.
Because the property is used as security, a secured loan often allows borrowing of a higher amount and at a much lower interest rate than unsecured lending.
Even with a poor credit rating & recent self-employment or new employment, a secured loan could still be used to take advantage of competitive interest rates.
A secured loan may even be able to help when you have been declined additional borrowing by your existing mortgage lender due to insufficient income. This is because most lenders calculate the maximum borrowing available to you based on a higher income multiple, sometimes up to 7 times your income.
Secured lending also offers longer repayment plans, sometimes 25 years or more. This will provide a low interest loan and a repayment plan to suit.
Loan amounts vary considerably, but some lenders will offer loans starting from £5000. The amount available to borrow will be determined by several factors such as the equity available in the property, credit status and income. All of these factors are more flexible with a second charge secured loan than they would be with a first charge mortgage.
A secured loan is used for many reasons such as to fund home improvements, buy a new car, build an extension, business purposes or consolidate debts.
Conclusion
UK Property Finance offers many financial solutions specializing in bridging loans for investment or business purposes. Second charge bridging loan is a means to empower borrowers, enabling them to take advantage of time-sensitive opportunities that can help them save money in the long run.
If you have already secured a mortgage against your property and require urgent funds, second charge bridging loans offer the time to bridge the financial gap, ultimately increasing the value of your investment property through refurbishment, redevelopment, or other additional work.
Once you are done with the development on your property, you can sell it for a higher value and repay the second charge bridging loan with a profit margin.
Second charge bridging loans are sustained in a low-interest-rate environment offering significant financial savings for various borrowers depending on their situation. For more information on the second charge bridging loans, please get in touch with us on 0116 464 5544 or fill out our contact form, and someone will be in touch with you shortly.
